Target RedCard review: A credit card for big box purchases

Whether it’s back to school, work or play, Target has become one of the favorite destinations for people looking for everyday items. Like most other big-box retailers, the store offers consumers a way to save extra money through its credit card offering, the Target RedCard.

If you’re a frequent Target shopper, whether in-store or online, the card’s perks and benefits should be appealing. Target RedCard approval is not restrictive, as applicants with fair credit are often eligible.

Also: The best store credit cards

Let’s take a closer look at the many pros and cons of the Target RedCard.

    Introductory bonusN / A

    APR22.90% (Variable)

    Recommended credit Good/Excellent

    Reward rateN / A

    Annual fees$0

    Intro Purchase APRN / A

    The Target RedCard is not complicated to use or benefit from. Use it to cover your purchases at Target and get 5% off the bill. However, some purchases are not eligible for the rebate, such as prescriptions, eye exams, and gift cards. But almost everything else is fair game.

    The 5% cash back is the main draw of the card, but it also comes with some useful extra perks. These include extended returns, free 2-day shipping, and exclusive offers for cardholders only. Target even has an app where cardholders can manage their account and make contactless purchases.

    Benefits

    • 5% off purchases (including Starbucks in-store)
    • Free 2-day delivery
    • Extended returns

    The inconvenients

    • High APR (typical for store cards)
    • Can only be used at target
    • No purchase protection

Factors to Consider

  • The card is limited in terms of purchasing power. You can only use the RedCard in the physical target locations or on the company’s website.
  • Perks and perks are limited in scope. You will not earn points, miles or cash back that can be redeemed for statement credits, travel or gift cards.
  • If you choose to carry over a balance from month to month, the high APR will wipe out any discounts received and ultimately make you pay more than the market value for current products.
  • The discount does not apply to all departments in the target locations. Products such as pharmacy prescription drugs or gift cards are not eligible for the 5% savings.
  • None of the purchase protections given to Visa, Mastercard or Amex cardholders are extended to RedCard owners.
  • You won’t have much incentive to buy the RedCard outside of the savings from frequent Target purchases. There is no welcome bonus available, intro APR or 0% interest balance transfer option.

Card details

The big appeal of the Target RedCard is the automatic savings you’ll receive with every swipe, chip-dip, or online purchase. If you’re able to shift some of your general spending to Target, like grocery shopping, that’ll be that much more rewarding.

With rewards cards from major issuers, you’ll often witness big incentive bonuses in categories like groceries, but this category is usually capped by spending limits. For example, the Blue Cash Everyday® card from American Express gives you 3% cashback in US supermarkets up to $6,000 per year and 1% once the limit is reached.

Suppose you spend $10,000 a year on groceries. With the Blue Cash Everyday card from American Express, you will receive $220 in cashback. With the RedCard, that same dollar amount would net you $500 in savings. So, making Target your primary Pantry storage destination gives you an edge on some non-store cards. However, not all targets offer groceries.

Fee details

If incurred, charges can eat into your target’s accumulated savings amounts. But right off the bat, you won’t pay an annual fee to own the card. If you make a late payment, it will cost you $40. A returned payment will cost you $29. There is no APR penalty, but the regular purchase APR is quite high unlike some of the RedCard competitors. So if you plan to hold on to a balance and pay off debt over a long period of time, any discount you may have gotten will be decimated by interest charges.

It’s a good rule with credit cards to try to pay off your statement balance in full each month to avoid interest charges.

Also: Why You Shouldn’t Sign Up For Store Credit Cards

How does the RedCard compare to other store credit cards?

You may want to consider other store credit cards when deciding which one best suits your needs. Competing retailer cards, such as the Capital One Walmart Rewards Mastercard, only offer a cash back bonus in the first year on in-store Walmart purchases. After that, the reward only applies to online purchases. Citi’s Costco Anywhere Visa Card will be more difficult to obtain, as it requires excellent credit and a Costco membership is required to qualify.

Consider an off-store card instead. Often they have a lower APR, better perks, and can be used in multiple locations. For example, the Wells Fargo Active Cash Card offers 2% cash back for every purchase, has no annual fee, has a 0% introductory APR for purchases and balance transfers, and comes with Visa Signature coverage.

If you’re looking for something with a little more reward potential, consider Blue Cash Preferred from American Express. It has a $95 annual fee (waived the first year), but it earns 6% cash back in US supermarkets (up to $6,000 spent per year, then 1%) and on some US streaming services . He also earns 3% on gas and public transit. Even spending as little as $2,000 a year on groceries, cardholders would net $120 in rewards, more than enough to cover annual fees. And that’s without considering its other bonus categories.

[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]

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